Pakistan's PM sacks heads of gas utilities over energy crisis

Pakistan’s PM sacked the chiefs of Sui Northern and Southern gas companies on Wednesday. (Photo credit: Sui Southern Gas Company)
Updated 09 January 2019

Pakistan's PM sacks heads of gas utilities over energy crisis

  • Pakistan is facing severe winter energy crisis
  • Critics blame the PTI government for discouraging LNG import

ISLAMABAD: Pakistan's Prime Minister Imran Khan on Wednesday sacked the chiefs of Sui Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC) over a severe winter energy crisis that has seen repeated supply outages.

Information Minister Fawad Chaudhry, the government's main spokesman, said Khan took the decision after an inquiry committee found that the two companies were responsible for the crisis.

Since the start of the winter, Pakistanis using natural gas for cooking and heating, as well as factories and power plants that rely on the fuel, have experienced significant inconvenience due to low gas pressure or no supply at all.

Factories and business in the port city of Karachi, Pakistan's commercial hub, have been badly affected, threatening jobs and the livelihoods of workers.

"Recently, people have faced a severe gas supply crisis," Chaudhry said in a statement. “The prime minister has announced the immediate sacking of the heads Sui Southern and Sui Northern," the statement said.

Pakistan has suffered from chronic energy supply problems for years, with regular power blackouts and gas outages caused by a mix of poorly maintained distribution networks, inefficient regulation and poor governance.

The country has significant natural gas reserves that can fill almost half its energy requirements but supply constraints have led to increasing demand for LNG imports.

Khan's critics say the natural gas companies are not solely responsible for the recent energy crisis, pointing to decisions made by his government which have discouraged the importing of LNG.

In October, the new government announced it would renegotiate agreements for two liquefied natural gas (LNG) import terminals as part of a wider investigation into deals struck by the previous government.

The rapid adoption of LNG infrastructure made Pakistan one of the industry's fastest-growing markets in Asia, sparking interest from the world's major energy producers and traders.

As part of moves to increase energy generation, Pakistan and the World Bank on Wednesday signed a financing agreement worth $100 million for a solar energy project in the southern part of the country, a finance ministry statement said.

Government presents mini-budget to boost exports, facilitate agricultural financing

Updated 23 January 2019

Government presents mini-budget to boost exports, facilitate agricultural financing

  • Tax on loans for agriculture, SMEs reduced from 39 percent to 20 percent
  • Economists urge the government to ensure strict implementation of all measures

ISLAMABAD: Finance Minister Asad Umar on Wednesday presented the third finance bill for the current fiscal year in the National Assembly of Pakistan, claiming it would boost investment, manufacturing and exports, and facilitate agricultural financing to promote economic activities in the country.

As opposition lawmakers chanted slogans against the government, the minister said he was presenting an “economic reforms package” to address the needs of the people.

“We are committed to helping deprived segment of the society and it is our constitutional responsibility to bridge the gap between the rich and the poor,” he said.

The minister also announced that he would present the “Medium Term Economic Framework” in Parliament next week to boost investment, manufacturing and agricultural produce in the country.

Umar said his government had identified four variables to fix Pakistan’s ailing economy. These included: balancing government’s revenues and expenses; increasing exports that recently plummeted from 14 percent of the GDP to 7 percent; encouraging foreign direct investment; and boosting national savings from 10.4 percent which, he added, were the lowest in the world.

To achieve all these targets, he announced to slash tax on small and medium enterprises and agricultural loans from 39 percent to 20 percent, abolish withholding tax on banking transactions for tax filers, and remove import duty on newsprint.

He said that duty on diesel engines for agricultural purposes was also decreased to five percent. Other than that, abolition of Gas Infrastructure Development Cess on fertilizers would help reduce prices of urea for 200 rupees per bag.

After approval of the Finance Supplementary (second amendment) Bill 2019, non-tax filers will be able to purchase cars up to 1300cc, though the tax will be increased for them.

Tax would also be increased on imported vehicles above 1800cc, he said, adding that tax for low priced imported mobile phones would be decreased but remain the same for expensive imported phones.

To promote low-income housing, the minister announced a revolving fund of five billion rupees for interest free loans, while tax on wedding halls up to 500 square feet would be decreased from 20,000 rupees to 5,000 rupees.

The government has also announced a five-year tax exemption on manufacturing of all products related to renewable energy, including solar panels and wind turbines.

The finance minister announced to abolish super tax for non-banking companies and on bids for sports franchises until profitability, while withholding tax on trading in the stock exchange, he said, had also been abolished.

To encourage exports, the minister said that a scheme of promissory notes was being introduced for businessmen and exporters that would help them get concessionary loans from commercial banks.

Criticizing the opposition earlier, the minister accused them of leaving the country indebted with 2,500 billion rupees to 3,000 billion rupees in loans that were not shown in the books.

However, members of the opposition parties were not impressed by the new finance bill.

“There is nothing in this budget that will generate economic activity in the country,” Pakistan Muslim League-Nawaz leader, Mohammad Zubair, told Arab News. “The government has announced tax reductions in different fields, but it is yet to be seen how this will affect revenue collection.”

Pakistan Peoples Party’s former finance minister, Saleem Mandviwala, said the budget was just a “plethora of numbers” and there was nothing in it for the common man.

“The government just wanted to show its performance by bringing the mini-budget. But it has badly failed to address the genuine issues of people,” he said while talking to Arab News.

Senior economist, Dr. Athar Ahmad, termed the budget “a step in the right direction,” saying that all these measures were needed to fix the economy.

However, he pointed out that the finance minister had failed to introduce any incentives for booming IT industry and measures to increase tax revenue. “The actual test of the government now is to ensure strict implementation of all the announced measures to achieve the targets,” said Dr. Ahmad.